What is a RGGI? A PennLive primer on Gov. Wolf’s big move on climate change policy

Gov. Tom Wolf on Thursday put Pennsylvania on a long and not entirely clear path to joining the Regional Greenhouse Gas Initiative, a multi-state partnership dedicated to reducing carbon dioxide emissions from power plants over time.

It’s a huge step forward for Pennsylvania in terms of fighting for lower carbon emissions, and it also significantly muscles up the impact the northeastern and mid-Atlantic states could have in the absence of federal leadership on the climate change issue.

We all have questions. Here are some answers to the things we know now; and some of the questions we’ll be seeking answers to going forward.

What is RGGI?

Begun in 2008, the Regional Greenhouse Gas Initiative has been the Eastern Seaboard’s primary regional answer to climate change.

And yes, for conversational purposes, you call it: ‘Reggie.’

The system, really a confederation of nine states that have agreed to play by the same marketplace rules, has created a cap-and-trade program where energy companies are essentially paying for the emission of greenhouse gases from their power plants.

The states do that through a system of allowances, or credits, that are allocated based on baseline pollution levels, and then set to steadily decline over time. The credits are sold at quarterly auctions, giving energy generators the choice of either paying more for a shrinking supply of allowances, or taking other steps to reduce their emissions to so that they don’t have buy as many in the first place.

Has it worked?

So far, there are indications are that RGGI has achieved its goal of speeding the reduction in carbon dioxide pollution, one of the leading causes of manmade global warming.

According to an analysis published by RGGI’s administrative support group last year, emissions from power plants in the collective group have fallen from 133 million tons in 2008, the year before the program launched, to 70 million tons in 2018.

That drop has come at a pace that is faster than declines in the rest of the nation, and, according to a separate analysis of consumer electric rates from the sustainable energy think tank Acadia Center, electricity prices have dropped by 5.7 percent across the region.

The prices, of course, have also been influenced by the simultaneous rise in natural gas production in the Marcellus Shale region. But program supporters have still been able to make the argument that a cap-and-trade program by itself will not cause rate increases.

What happens to the auction proceeds?

The dollars the energy producers pay for their allowances - at one credit for each ton of pollution generated - are apportioned back to the participating states according to their share of the total market.

Pennsylvania’s addition alone will account for about 78 million tons of carbon emissions, which is slightly more than all of the current nine RGGI states combined. At the most recent credit prices, that could net the state something more than $300 million per year.

RGGI states are encouraged to use the proceeds to advance their respective energy policy goals or to bolster themselves against the effects of climate change, but Maryland Environment Secretary Ben Grumbles said participating states have broad latitude to make their own investment choices.

Grumbles said other RGGI states thus far have used proceeds for programs including weatherization of buildings; programs to promote the use of more energy-efficient products; building out infrastructure for electric vehicles; and even direct rebates to electric ratepayers.

Who’s in it?

The following Eastern Seaboard states: Maryland, Delaware, New York, Connecticut, Rhode Island, Massachusetts, New Hampshire, Vermont and Maine. Plus, New Jersey is scheduled to rejoin RGGI next year.

Are there any safeguards against sudden price swings for the credits?

Yes.

If the allowance prices exceed a certain level - and that ceiling is currently about $10 per credit - additional allowances are allocated from a cost containment reserve to keep the market from spiking. This mechanism has not been used in any of the last four years.

Credits prices in the most recent auction, held in September, averaged $5.20.

Can the governor do this without legislative approval?

This is a gray area.

The governor seems to believe so, and his staff has pointed to language in the state’s existing air pollution control act that gives the state’s Department of Environmental Protection the power to:

“Cooperate with... other states or any interstate agencies with respect to the control, prevention, abatement and reduction of air pollution, and where appropriate formulate interstate air pollution control compacts or agreements for the submission thereof to the General Assembly.”

The kicker is in that last clause: Does submission to the General Assembly mean for review and approval?

And even if the governor does have the latitude to build the program, some legislative staffers reached this week said they aren’t sure the language in the air pollution law covers implementation of a cap-and-trade program that some might define as pollution tax.

Leaders of the majority Republican caucuses in both the House and Senate let it be known Monday that they expect to have a great deal of input in Pennsylvania’s RGGI gameplan - if they decide to support it at all.

Wolf, for his part, seemed intent on striving for a consensus package - including agreement on how the proceeds to the state are used - that makes this question a moot point.

At the press event where he signed his executive order Thursday, the governor said:

“We know that we can not complete this process in a vacuum,” Wolf said. "We know that the conversation that we’ve begun over the past year needs to continue if we are going to craft regulations that fit Pennsylvania’s unique energy mix.

“We need to make sure that the transition to a cleaner energy mix does not leave workers and communities behind. And it will take buy-in from the Legislature... But we are committing today - I am committing today - to the steps necessary to move forward.”

Democrat Wolf and the Republican majorities in the state House and Senate have clashed forever on a natural gas severance tax. Could they ever agree on this?

This is a total wait-and-see.

There are many Republican (and some Democratic) legislators from Pennsylvania’s coal regions who would probably never buy in, because coal is the energy source that pollutes the most and will pay the highest cost under RGGI.

But there are also a smaller number of Republican lawmakers from the southeast, or who have constituents working at nuclear stations, who might find reasons to support RGGI participation.

For most of the rest, it’s literally too early to take a hard and fast position because until the Wolf Administration put its best proposal on the table, they don’t really know what they’re supposed to react to.

Much will depend on the final package.

For example, some RGGI states have exempted certain power source types to suit local economic concerns. A carve-out in Pennsylvania to save waste coal plants - which provide a different kind of environmental benefit by cleaning up these imposing refuse piles that dot mine country - could bring some potential opponents around.

How quickly does this happen?

In any scenario, it’ll be a minute.

New Jersey Gov. Phil Murphy declared his intent to rejoin RGGI in January 2018. That will take effect in January 2020.

The one thing we know for sure about Pennsylvania’s timeline thus far is that Wolf’s executive order calls for the submission of the regulations that create the cap-and-trade program here to the state’s Environmental Quality Board by July 31, 2020.

That would trigger a public comment period, after which a revised and final rule would be developed for further consideration by the state’s Independent Regulatory Review Commission. It would not be a shocker if Pennsylvania’s entry process takes at least as long, if not longer, than New Jersey’s.

Wolf, at one point Thursday, speculated the process will take two years. “There’s going to be absolutely a Iot of opportunity for people to weigh in,” Wolf said. “I just want to get this thing started. I think we need to start.”

But many environmental advocates say that if Pennsylvania is going to meet its long-term carbon reduction targets, much more will have to be done.

Wolf sees it as a legacy issue - not just for him, but for all Pennsylvanians.

“If we want a Pennsylvania that is habitable for our children and for our grandchildren, where our temperatures aren’t in the nineties - as they were yesterday - in October, and where flooding doesn’t destroy homes and businesses over and over again, we need to get serious right now about addressing the climate crisis," he said.

Does RGGI want us?

It sure seems so.

Pennsylvania’s entry would mark the largest expansion of RGGI since its inception 11 years ago. Nationally, the entry by America’s number two natural gas producer and number three coal producer into a carbon reduction plan would also mark a major milestone in the drive by states to counter the impact of the Trump administration’s retreat from climate action.

Here was Maryland Secretary Ben Grumbles, current chair of the RGGI board, when reached by PennLive after Wolf’s press event Thursday: “We’re all encouraged by the steps that Governor Wolf is taking. The larger the region and the more power plants that are subject to the cap... we can make a bigger difference in protecting the environment.”

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